Understanding the CFPB’s Withdrawal of Guidance—and Why Overdraft Risk Remains

On May 12, 2025, the Consumer Financial Protection Bureau (CFPB) announced the withdrawal of 67 guidance documents—spanning interpretive rules, policy statements, and advisory opinions issued since the Bureau’s inception. While this action may appear to reduce regulatory complexity, it does not eliminate the need for careful oversight and sound practices when it comes to overdraft programs and fee assessments.

In fact, the change reinforces the importance of transparent, well-structured, and long-lasting strategies for community banks and credit unions.

Why the CFPB Withdrew the Guidance

The rescinded documents were issued outside the formal rulemaking process—often as circulars or bulletins that introduced new expectations without public comment or statutory grounding. According to Acting CFPB Director Russell Vought, many of these materials imposed compliance burdens that exceeded what the law requires.

In his statement, Vought noted, “In many instances, this guidance has adopted interpretations that are inconsistent with the statutory text and impose compliance burdens on regulated parties outside of the strictures of notice-and-comment rulemaking.”

This shift signals a return to more traditional regulatory processes. However, while the communication method is changing, the core concerns regulators have flagged over the past several years have not disappeared.

The Real Risks Behind the Rescinded Guidance

The rescinded guidance documents addressed several areas that continue to receive attention in supervisory exams and, in some cases, legal action. These include:

• APSN (Authorize Positive, Settle Negative): Concerns about charging overdraft fees on debit card transactions that were authorized on a positive balance but settled negative remain relevant from a UDAAP (Unfair, Deceptive, or Abusive Acts or Practices) standpoint.
• Regulation E Opt-In Documentation: Institutions are still expected to capture and retain evidence of consumer opt-ins for overdraft coverage on ATM and everyday debit card transactions.
• Disclosure Clarity: Complex or hard-to-understand language in account disclosures can create examiner concerns, even if technically compliant with existing regulations.
• Representment/NSF Fees: Charging more than one non-sufficient funds fee on the same item has been cited by multiple agencies and remains a key area of interest.
• Consumer Cost and Transparency: Efforts to reduce unexpected fees and improve fee transparency continue to shape both policy dialogue and public expectations.

While the formal guidance documents have been rescinded, the supervisory focus on these practices remains. Financial institutions should not interpret the withdrawal as a rollback of examiner scrutiny or reputational risk.

A Time to Reassess and Realign

For many institutions, this development offers a timely opportunity to evaluate how current overdraft strategies align with regulatory expectations and account holder needs. It also presents an important moment to ensure that documentation practices, disclosure clarity, and system configurations are consistent with sound risk management.

ADVANTAGE has long supported community banks and credit unions in implementing consumer-focused overdraft solutions, emphasizing compliance, transparency, and operational integrity. While the regulatory environment may shift, the need for a clear and sustainable strategy remains unchanged.

Moving Forward Thoughtfully

While the withdrawal of guidance may prompt some institutions to assume a lower level of regulatory concern, that assumption could be short-sighted. The issues raised—such as APSN, opt-in documentation, and disclosure clarity—remain active points of examiner focus and potential legal exposure.

For institutions that haven’t revisited their overdraft strategies recently, this moment offers a practical opportunity to assess whether existing practices remain aligned with evolving expectations. Quiet periods in regulation can be a time to solidify—not pause—your approach.

Understanding the risks is one thing—knowing how to address them effectively is another. Request a complimentary risk assessment to learn how ADVANTAGE supports proactive, consumer-focused strategies that align with evolving expectations.

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ADVANTAGE is a trusted consulting partner for community banks and credit unions nationwide. We deliver consumer-focused overdraft solutions, compliance expertise, account acquisition strategies, and technology consulting to help institutions strengthen revenue, reduce risk, and grow market share. Learn more at advantage-fi.com.